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2 years ago

the seattle corporation has been presented with an investment opportunity whihc will yield cash flows of 30000 per year

Business

1 answer:

asambeis [7]2 years ago

8 0

b. 4.86 years is the payback period for this investment.

Year 0 1 2 3 4 5 6 7 8 9 10

Investments cost $ (150,000)

Yielding cash 30000 30000 30000 30000 35000 35000 35000 35000 35000 40000

Net cash flow $ (150,000) 30000 30000 30000 30000 35000 35000 35000 35000 35000 40000

Cumulative cash flow $ (150,000) (120,000) (90,000) (60,000) (30,000) 5,000 40,000 75,000 110,000 145,000 185,000.

Payback period = 4+(30000/35000)

(Years) = 4.86

The payback period is defined as the number of years required to recover the original cash investment. In other words, it is the period during which a machine, plant, or other investment has generated sufficient net income to cover its investment costs.

The question is incomplete. Please read below to find the missing content.

The Seattle Corporation has been presented with an investment opportunity that will yield cash flows of $30,000 per year in Years 1 through 4, $35,000 per year in Years 5 through 9, and $40,000 in Year 10. This investment will cost the firm $150,000 today, and the firm's required rate of return is 10 percent. Assume cash flows occur evenly during the year, 1/365th each day. What is the payback period for this investment?

4.00 years

4.86 years

6.12 years

4.35 years

5.23 years

Learn more about investment here: brainly.com/question/24703884

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